UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 15 ) SINO-FOREST CORPORATION, ) Case No. 13-10361 (MG) ) Debtor in a Foreign Proceeding. ) ) ORDER GRANTING RECOGNITION OF FOREIGN PROCEEDING, ENFORCEMENT OF CANADIAN ORDERS, AND RELATED RELIEF Upon consideration of the Verified Petition for Recognition of Foreign Proceeding and Related Relief which was filed on February 4, 2013 (the “Chapter 15 Petition”) 1 by FTI Consulting Canada Inc. the court-appointed monitor (the “Monitor”) and authorized foreign representative of the proceeding (the “Canadian Proceeding”) of Sino-Forest Corporation (“SFC”) under Canada’s Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (as amended, the “CCAA”) pending before the Ontario Superior Court of Justice (Commercial List) (the “Ontario Court”), commencing the above-captioned chapter 15 case (the “Chapter 15 Case”) pursuant to sections 1504, 1509, and 1515 of title 11 of the United States Code (as amended, the “Bankruptcy Code”) and seeking the entry of an order (i) recognizing the Canadian Proceeding as a “foreign main proceeding” pursuant to sections 1515 and 1517 of the Bankruptcy Code and (ii) giving full force and effect in the United States to (a) the Initial Order of the Ontario Court dated March 30, 2012, including any extensions or amendments thereof (the “Initial Order”) and (b) the Plan Sanction Order of the Ontario Court dated December 10, 2012, including any extensions or amendments thereof (the “Plan Sanction Order,” and with the Initial Order, the “Canadian Orders”) sanctioning SFC’s plan of 1 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Chapter 15 Petition. 13-10361-mg Doc 16 Filed 04/15/13 Entered 04/15/13 13:12:06 Main Document Pg 1 of 25
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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
)
In re: ) Chapter 15
)
SINO-FOREST CORPORATION, ) Case No. 13-10361 (MG)
)
Debtor in a Foreign Proceeding. )
)
ORDER GRANTING RECOGNITION OF FOREIGN PROCEEDING,
ENFORCEMENT OF CANADIAN ORDERS, AND RELATED RELIEF
Upon consideration of the Verified Petition for Recognition of Foreign
Proceeding and Related Relief which was filed on February 4, 2013 (the “Chapter 15
Petition”)1 by FTI Consulting Canada Inc. the court-appointed monitor (the “Monitor”) and
authorized foreign representative of the proceeding (the “Canadian Proceeding”) of Sino-Forest
Corporation (“SFC”) under Canada’s Companies’ Creditors Arrangement Act, R.S.C. 1985,
c. C-36 (as amended, the “CCAA”) pending before the Ontario Superior Court of Justice
(Commercial List) (the “Ontario Court”), commencing the above-captioned chapter 15 case
(the “Chapter 15 Case”) pursuant to sections 1504, 1509, and 1515 of title 11 of the United
States Code (as amended, the “Bankruptcy Code”) and seeking the entry of an order
(i) recognizing the Canadian Proceeding as a “foreign main proceeding” pursuant to sections
1515 and 1517 of the Bankruptcy Code and (ii) giving full force and effect in the United States
to (a) the Initial Order of the Ontario Court dated March 30, 2012, including any extensions or
amendments thereof (the “Initial Order”) and (b) the Plan Sanction Order of the Ontario Court
dated December 10, 2012, including any extensions or amendments thereof (the “Plan Sanction
Order,” and with the Initial Order, the “Canadian Orders”) sanctioning SFC’s plan of
1 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the
Chapter 15 Petition.
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compromise and reorganization dated December 3, 2012 (as the same may be amended, revised
or supplemented in accordance with its terms, the “Plan”),2 pursuant to sections 105(a), 1507,
and 1521 of the Bankruptcy Code; and it appearing that the Court has jurisdiction over this
matter pursuant to 28 U.S.C. §§ 157 and 1334 and the “Amended Standing Order of Reference
Re: Title 11” of the United States District Court for the Southern District of New York (Preska,
C.J.) dated January 31, 2012; and it appearing that this is a core proceeding pursuant to 28
U.S.C. § 157(b)(2)(P); and it appearing that venue is proper in this District pursuant to 28 U.S.C.
§§ 1410(2) and (3); and the Court having considered and reviewed the Memorandum of Law in
Support of Chapter 15 Petition for Recognition of Foreign Proceeding and Related Relief (the
“Memorandum of Law”) and the Declaration of Jeremy C. Hollembeak dated February 4, 2013
(the “Hollembeak Declaration”) and the exhibits attached thereto, both filed
contemporaneously with the Chapter 15 Petition; and the Court having held a hearing to consider
the relief requested in the Chapter 15 Petition on March 6, 2013 (the “Recognition Hearing”);
and it appearing that timely notice of the filing of the Chapter 15 Petition, the Memorandum of
Law, the Hollembeak Declaration, and the Recognition Hearing has been given to SFC’s known
creditors and that no other or further notice need be provided; and upon all the proceedings had
before the Court; and after due deliberation and sufficient cause appearing therefor;
THE COURT HEREBY MAKES THE FOLLOWING FINDINGS OF FACT AND
CONCLUSIONS OF LAW:
A. On March 30, 2012 (the “Filing Date”), the Canadian Proceeding was
commenced by SFC under the CCAA in the Ontario Court.
2 The Initial Order and the Plan Sanction Order are attached hereto as Exhibit A and Exhibit B, respectively,
while the Plan is annexed as Schedule A to the Plan Sanction Order.
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B. As of the Filing Date, SFC was a Canadian corporation amalgamated
under the Canada Business Corporations Act, R.S.C. 1985, c. C-44, with its registered office in
Mississauga, Ontario, and its common shares were listed on the Toronto Stock Exchange.
C. As of the Filing Date, SFC’s indebtedness included indebtedness related to
its issuance of four series of notes aggregating approximately $1.8 billion in principal amount
(the “Notes”)3 governed by separate indentures (collectively, the “Notes Indentures”).
D. As of the Filing Date, multiple class action lawsuits were pending against
SFC, among other defendants (as defined in the Plan, the “Class Actions”), including one such
action in the United States originally commenced in the Supreme Court of the State New York,
County of New York, and subsequently removed to the United States District Court for the
Southern District of New York and assigned the case caption David Leapard, et al., v. Allen T.Y.
Chan, et al., Case No. 1:12-cv-01726 (VM) (S.D.N.Y.).
E. On the Filing Date, a Restructuring Support Agreement was executed by
SFC, its direct subsidiaries and certain Noteholders4 (as may be amended, restated and varied
from time to time in accordance with its terms and the terms of the Plan and the Plan Sanction
Order, the “RSA”).
3 The Notes include: (i) $600M issued October 21, 2010 and due October 21, 2017, interest payable semi-
annually at 6.25% per annum, guaranteed by 60 of SFC’s direct and indirect subsidiaries and share pledges
from 10 of such subsidiaries (the “2017 Notes”); (ii) $460M issued December 17, 2009 and due December
15, 2016, interest payable semi-annually at 4.25% per annum, guaranteed by 64 of SFC’s direct and
indirect subsidiaries (the “2016 Notes”); (iii) $399M issued July 27, 2009 and due July 28, 2014, interest
payable semi-annual at 10.25% per annum, guaranteed by 60 of SFC’s direct and indirect subsidiaries and
share pledges from 10 of such subsidiaries (the “2014 Notes”); and (iv) $345M issued July and August
2008 due August 1, 2013, interest payable semi-annually at 5% per annum, guaranteed by 64 of SFC’s
direct and indirect subsidiaries (the “2013 Notes”).
4 “Noteholders” means, collectively, the beneficial owners of Notes as of the Distribution Record Date and,
as the context requires, the registered holders of Notes as of the Distribution Record Date, and
“Noteholder” means anyone of the Noteholders. “Distribution Record Date” means the Plan
Implementation Date, or such other date as SFC, the Monitor and the Initial Consenting Noteholders may
agree.
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F. On the Filing Date, the Ontario Court entered the Initial Order, which
provided, among other relief, for a Stay Period (as defined below) during which the
commencement or continuation of certain proceedings or enforcement processes against or in
respect of certain parties or property were stayed. During the pendency of the Canadian
Proceeding, the Ontario Court extended the Stay Period on multiple occasions, including
pursuant to a November 23, 2012 order extending the Stay Period through February 3, 2013.
The Ontario Court has not entered any order extending the Stay Period in the Initial Order past
February 1, 2013 with respect to any party except with respect to the Monitor as discussed
below.
G. On December 3, 2012, a meeting of creditors was held at the offices of
Gowling Lafleur Henderson LLP, Canadian counsel to the Monitor, where the Plan was
approved by the requisite number and amount of creditors required for approval under the
CCAA.
H. On December 7, 2012, a hearing was held before the Ontario Court for the
approval of the Plan.
I. On December 10, 2012, the Ontario Court granted the Plan Sanction
Order, and approved the Plan.
J. On January 30, 2013 (the “Plan Implementation Date”), the Plan was
implemented in Canada.
K. On February 4, 2013, the Monitor commenced this Chapter 15 Case and
requested the relief set forth in the Chapter 15 Petition.
L. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157
and 1334 and section 1501 of the Bankruptcy Code.
M. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(P).
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N. Venue is proper in this District pursuant to 28 U.S.C. §§ 1410(3).
O. The Canadian Proceeding is a “foreign proceeding” within the meaning of
section 101(23) of the Bankruptcy Code.
P. The Canadian Proceeding is a “foreign main proceeding” within the
meaning of section 1502(4) of the Bankruptcy Code because the Canadian Proceeding is pending
in Canada, the location of the center of main interests for SFC.
Q. The Monitor is a “person” within the meaning of section 101(41) of the
Bankruptcy Code and a “foreign representative” within the meaning of section 101(24) of the
Bankruptcy Code.
R. The Chapter 15 Petition meets the requirements of sections 1504, 1509,
and 1515 of the Bankruptcy Code.
S. Recognizing the Canadian Proceeding would not be manifestly contrary to
the public policy of the United States, as prohibited by section 1506 of the Bankruptcy Code.
T. The Canadian Proceeding is entitled to recognition by this Court pursuant
to section 1517 of the Bankruptcy Code.
U. The Monitor is entitled to all the relief provided by section 1520 of the
Bankruptcy Code without limitation.
V. The relief granted hereby is necessary and appropriate, in the interests of
the public and international comity, consistent with the public policy of the United States,
warranted pursuant to sections 105(a), 1507, and 1521 of the Bankruptcy Code, and will not
cause any hardship to any party in interest that is not outweighed by the benefits of granting that
relief.
W. The interest of the public will be served by this Court granting the relief
requested by the Monitor as provided for herein.
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NOW THEREFORE, IT IS HEREBY ORDERED AS FOLLOWS:
1. The Canadian Proceeding is hereby recognized as a foreign main
proceeding pursuant to section 1517 of the Bankruptcy Code.
2. All provisions of section 1520 of the Bankruptcy Code apply in this
Chapter 15 Case throughout the duration of this Chapter 15 Case or until otherwise ordered by
this Court; provided, however, that the application of section 362 of the Bankruptcy Code in this
case pursuant to section 1520 of the Bankruptcy Code shall apply only with respect to SFC and
the property of SFC, if any, that is within the territorial jurisdiction of the United States. For the
avoidance of doubt, the provisions of this Order shall not and shall not be deemed to release,
enjoin, impose a stay of, or otherwise impact any claims and/or proceedings unless such claims
and/or proceedings are released, enjoined, stayed, or otherwise impacted by the Plan and/or the
Plan Sanction Order; provided, however, that nothing in this Order shall limit any stay relief in
effect in the Canadian Proceeding with respect to the Monitor within the United States.
3. Paragraphs 17, 19, and 28-36 of the Initial Order,5 solely as they relate to
the Monitor as set forth in full below,6 are hereby given full force and effect in the United States
and are binding on all persons subject to this Court’s jurisdiction pursuant to sections 105(a),
1507, and 1521 of the Bankruptcy Code:7
Paragraph 17. [U]ntil and including April 29, 2012, or such later date as [the Ontario
Court] may order (the “Stay Period”), no proceeding or enforcement process in any court
or tribunal (each, a “Proceeding”) shall be commenced or continued against or in respect
5 Capitalized terms in these provisions, unless defined herein, shall have the meaning ascribed to them in the
Initial Order.
6 Pursuant to an order of the Ontario Court, the protections granted to the Monitor in the Initial Order remain
effective and will continue through its fulfillment of post-implementation duties. See Order of the Ontario
Court regarding post-implementation matters dated January 31, 2013 (attached as Exhibit J to Dkt. No. 4,
Declaration of Jeremy C. Hollembeak in Support of Petition for Recognition of Foreign Proceeding and
Related Relief), at ¶ 4.
7 For the avoidance of doubt, the omitted language in the following paragraphs is not subject to the terms of
this Order.
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of … the Monitor … except with the written consent of [SFC] and the Monitor, or with
leave of [the Ontario Court] ….
Paragraph 19. [D]uring the Stay Period, all rights and remedies of any individual, firm,
corporation, governmental body or agency, or any other entities (all of the foregoing,
collectively being “Persons” and each being a “Person” [as used in the Initial Order])
against or in respect of … the Monitor … are hereby stayed and suspended and shall not
be commenced, proceeded with or continued, except with the written consent of [SFC]
and the Monitor, or leave of [the Ontario Court], provided that nothing in [the Initial
Order] shall … (ii) affect such investigations, actions, suits or proceedings by a
regulatory body as are permitted by Section 11.1 of the CCAA, (iii) prevent the filing of
any registration to preserve or perfect a security interest, [or] (iv) prevent the registration
of a claim for lien ....
Paragraph 28. [FTI Canada Consulting Inc.] is hereby appointed pursuant to the CCAA
as the Monitor, an officer of [the Ontario Court], to monitor the business and financial
affairs of [SFC] with the powers and obligations set out in the CCAA or set forth [in the
Initial Order] and that [SFC] and its shareholders, officers, directors, and Assistants shall
advise the Monitor of all material steps taken by [SFC] pursuant to [the Initial Order],
and shall co-operate fully with the Monitor in the exercise of its powers and discharge of
its obligations and provide the Monitor with the assistance that is necessary to enable the
Monitor to adequately carry out the Monitor’s functions.
Paragraph 29. [T]he Monitor, in addition to its prescribed rights and obligations under
the CCAA, is … directed and empowered to: … (b) report to [the Ontario Court] at such
times and intervals as the Monitor may deem appropriate with respect to matters relating
to the Property, the Business, and such other matters as may be relevant to the
proceedings herein; … (f) have full and complete access to the Property, including the
premises, books, records, data, including data in electronic form, and other financial
documents of [SFC] to the extent that is necessary to adequately assess [SFC’s] business
and financial affairs or to perform its duties arising under [the Initial Order]; … (g) be at
liberty to engage independent legal counselor such other persons as the Monitor deems
necessary or advisable respecting the exercise of its powers and performance of its
obligations under [the Initial Order]; … (i) perform such other duties as are required by
[the Initial Order] or by [the Ontario Court] from time to time.
Paragraph 30. [W]ithout limiting paragraph 29 above, in carrying out its rights and
obligations in connection with [the Initial Order], the Monitor shall be entitled to take
such reasonable steps and use such services as it deems necessary in discharging its
powers and obligations, including, without limitation, utilizing the services of FTI
Consulting (Hong Kong) Limited (“FTI HK”).
Paragraph 31. [T]he Monitor shall not take possession of the Property (or any property
or assets of [SFC’s] subsidiaries) and shall take no part whatsoever in the management or
supervision of the management of the Business (or any business of [SFC’s] subsidiaries)
and shall not, by fulfilling its obligations hereunder, be deemed to have taken or
maintained possession or control of the Business or Property, or any part thereof (or of
any business, property or assets, or any part thereof, of any subsidiary of [SFC]).
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Paragraph 32. [N]othing … contained [in the Initial Order] shall require the Monitor to
occupy or to take control, care, charge, possession or management (separately and/or
collectively, “Possession”) of any of the Property (or any property of any subsidiary of
[SFC]) that might be environmentally contaminated, might be a pollutant or a
contaminant, or might cause or contribute to a spill, discharge, release or deposit of a
substance contrary to any federal, provincial or other law respecting the protection,
conservation, enhancement, remediation or rehabilitation of the environment or relating
to the disposal of waste or other contamination including, without limitation, the
Canadian Environmental Protection Act, the Ontario Environmental Protection Act, the
Ontario Water Resources Act, or the Ontario Occupational Health and Safety Act and
regulations thereunder (the “Environmental Legislation”), provided however that
nothing [in the Initial Order] shall exempt the Monitor from any duty to report or make
disclosure imposed by applicable Environmental Legislation. The Monitor shall not, as a
result of [the Initial Order] or anything done in pursuance of the Monitor’s duties and
powers under [the Initial Order], be deemed to be in Possession of any of the Property (or
of any property of any subsidiary of [SFC]) within the meaning of any Environmental
Legislation, unless it is actually in possession.
Paragraph 33. [T]he Monitor shall provide any creditor of [SFC] with information
provided by [SFC] in response to reasonable requests for information made in writing by
such creditor addressed to the Monitor. The Monitor shall not have any responsibility or
liability with respect to the information disseminated by it pursuant to this paragraph. In
the case of information that the Monitor has been advised by [SFC] is confidential, the
Monitor shall not provide such Information to creditors unless otherwise directed by [the
Ontario Court] or on such terms as the Monitor and [SFC] may agree.
Paragraph 34. [I]n addition to the rights and protections afforded the Monitor under the
CCAA or as an officer of [the Ontario Court], the Monitor shall incur no liability or
obligation as a result of its appointment or the carrying out of the provisions of [the Initial
Order], save and except for any gross negligence or willful misconduct on its part.
Nothing in [the Initial Order] shall derogate from the protections afforded the Monitor by
the CCAA or any applicable legislation.
Paragraph 35. [T]he Monitor, counsel to the Monitor, … [and] FTI HK … shall be paid
their reasonable fees and disbursements, in each case at their standard rates and charges,
by [SFC], whether incurred prior to or subsequent to the date of [the Initial Order], as part
of the costs of these proceedings. [SFC] is hereby authorized and directed to pay the
accounts of the Monitor, counsel for the Monitor, … [and] FTI HK] … on a weekly basis
or otherwise in accordance with the terms of their engagement letters.
Paragraph 36. [T]he Monitor and its legal counsel shall pass their accounts from time to
time, and for this purpose the accounts of the Monitor and its legal counsel are hereby
referred to a judge of the Commercial List of the Ontario Superior Court of Justice.
4. The Plan and Plan Sanction Order, in their entirety, are hereby given full
force and effect in the United States and are binding on all persons subject to this Court’s
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jurisdiction pursuant to sections 105(a), 1507, and 1521 of the Bankruptcy Code. All rights of
creditors and parties in interest of SFC with respect to the Canadian Proceeding, including
without limitation, the allowance, disallowance, and dischargeability of claims under the Plan
and the restructuring transactions contemplated thereunder, shall be assessed, entered and/or
resolved in accordance with the Plan and/or the relevant provisions of the CCAA and the
Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended, or as otherwise
determined in the Canadian Proceeding, and each and every creditor or party in interest is
permanently restricted, enjoined and barred from asserting such rights, except as may have been
or may be asserted in the Canadian Proceeding or in accordance with the Plan.
5. Without limitation as to the relief in the preceding paragraph, the
following provisions of the Plan and Plan Sanction Order are hereby given full force and effect
in the United States and are binding on all persons subject to this Court’s jurisdiction pursuant to
sections 105(a), 1507, and 1521 of the Bankruptcy Code:8
Article 7 of the Plan9
RELEASES
7.1 Plan Releases. Subject to 7.2 [of the Plan], all of the following shall be fully, finally,
irrevocably and forever compromised, released, discharged, cancelled and barred on the
Plan Implementation Date:
(a) all Affected Claims,10
including all Affected Creditor Claims,11
Equity Claims,12
8 Capitalized terms in these provisions, unless defined herein, shall have the meaning ascribed to them in the
Plan.
9 As effectuated by Paragraphs 30, 32, and 38 of the Plan Sanction Order.
10 “Affected Claim” means any Claim, D&O Claim or D&O Indemnity Claim that is not: an Unaffected
Claim; a Section 5.1(2) D&O Claim; a Conspiracy Claim; a Continuing Other D&O Claim; a Non-
Released D&O Claim; or a Subsidiary Intercompany Claim, and “Affected Claim” includes any Class
Action Indemnity Claim. For greater certainty, all of the following are Affected Claims: Affected Creditor
Claims; Equity Claims; Noteholder Class Action Claims (other than the Continuing Noteholder Class
Action Claims); and Class Action Indemnity Claims.
11 “Affected Creditor Claim” means any Ordinary Affected Creditor Claim or Noteholder Claim.
“Ordinary Affected Creditor Claim” means a Claim that is not: an Unaffected Claim; a Noteholder
Claim; an Equity Claim; a Subsidiary Intercompany Claim; a Noteholder Class Action Claim; or a Class
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Action Indemnity Claim (other than a Class Action Indemnity Claim by any of the Third Party Defendants
in respect of the Indemnified Noteholder Class Action Claims).
“Noteholder Claim” means any Claim by a Noteholder (or a Trustee or other representative on the
Noteholder’s behalf) in respect of or in relation to the Notes owned or held by such Noteholder, including
all principal and Accrued Interest payable to such Noteholder pursuant to such Notes or the Note
Indentures, but for greater certainty does not include any Noteholder Class Action Claim.
“Unaffected Claim” means any: (a) Claim secured by the Administration Charge; (b) Government Priority
Claim; (c) Employee Priority Claim; (d) Lien Claim; (e) any other Claim of any employee, former
employee, Director or Officer of SFC in respect of wages, vacation pay, bonuses, termination pay,
severance pay or other remuneration payable to such Person by SFC, other than any termination pay or
severance pay payable by SFC to a Person who ceased to be an employee, Director or Officer of SFC prior
to the date of this Plan; (f) Trustee Claims; and (g) any trade payables that were incurred by SFC (i) after
the Filing Date but before the Plan Implementation Date; and (ii) in compliance with the Initial Order or
other Order issued in the CCAA Proceeding.
“Administration Charge” has the meaning ascribed thereto in ¶ 37 of the Initial Order.
“Government Priority Claims” means all Claims of Governmental Entities in respect of amounts that
were outstanding as of the Plan Implementation Date and that are of a kind that could be subject to a
demand under: (a) subsections 224(1.2) of the Canadian Tax Act; (b) any provision of the Canada Pension
Plan or the Employment Insurance Act (Canada) that refers to subsection 224(1.2) of the Canadian Tax Act
and provides for the collection of a contribution, as defined in the Canada Pension Plan, or employee's
premium or employer's premium as defined in the Employment Insurance Act (Canada), or a premium
under Part VII. 1 of that Act, and of any related interest, penalties or other amounts; or (c) any provision of
provincial legislation that has a similar purpose to subsection 224(1.2) of the Canadian Tax Act, or that
refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest,
penalties or other amounts, where the sum: (i) has been withheld or deducted by a person from a payment
to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under
the Canadian Tax Act; or (ii) is of the same nature as a contribution under the Canada Pension Plan if the
province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the
Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in
that subsection.
“Employee Priority Claims” means the following Claims of employees and former employees of SFC:
(a) Claims equal to the amounts that such employees and former employees would have been qualified to
receive under paragraph 136(1)(d) of the BIA if SFC had become bankrupt on the Filing Date; and
(b) Claims for wages, salaries, commissions or compensation for services rendered by them after the Filing
Date and on or before the Plan Implementation Date.
“Lien Claim” means any Proven Claim of a Person indicated as a secured creditor in Schedule “B” to the
Initial Order (other than the Trustees) that is secured by a lien or encumbrance on any property of SFC,
which lien is valid, perfected and enforceable pursuant to Applicable Law, provided that the Charges and
any Claims in respect of Notes shall not constitute “Lien Claims.”
“Trustee Claims” means any rights or claims of the Trustees against SFC under the Note Indentures for
compensation, fees, expenses, disbursements or advances, including reasonable legal fees and expenses,
incurred or made by or on behalf of the Trustees before or after the Plan Implementation Date in
connection with the performance of their respective duties under the Note Indentures or this Plan.
“Trustees” means, collectively, The Bank of New York Mellon in its capacity as trustee for the 2013
Notes and the 2016 Notes, and Law Debenture Trust Company of New York in its capacity as trustee for
the 2014 Notes and the 2017 Notes, and “Trustee” means either one of them.
12 “Equity Claim” means a Claim that meets the definition of “equity claim” in section 2(1) of the CCAA
and, for greater certainty, includes any of the following: (a) any claim against SFC resulting from the
ownership, purchase or sale of an equity interest in SFC, including the claims by or on behalf of current or
former shareholders asserted in the Class Actions; (b) any indemnification claim against SFC related to or
arising from the claims described in sub-paragraph (a), including any such indemnification claims against
SFC by or on behalf of any and all of the Third Party Defendants (other than for Defense Costs, unless any
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D&O Claims13
(other than Section 5.1(2) D&O Claims,14
Conspiracy Claims,15
Continuing Other D&O Claims16
and Non-Released D&O Claims17
), D&O
Indemnity Claims18
(except as set forth in section 7.1(d) [of the Plan]) and
such claims for Defense Costs have been determined to be Equity Claims subsequent to the date of the
Equity Claims Order); and (c) any other claim that has been determined to be an Equity Claim
pursuant to an Order of the Court.
“Defense Costs” means, as set forth in section 4.8 of the Plan, all Claims against SFC for indemnification
of defense costs incurred by any Person (other than a Named Director or Officer) in connection with
defending against Shareholder Claims (as defined in the Equity Claims Order), Noteholder Class Action
Claims or any other claims of any kind relating to SFC or the Subsidiaries.
“Equity Claims Order” means the Order under the CCAA of the Honourable Justice Morawetz dated July
27, 2012, in respect of Shareholder Claims and Related Indemnity Claims against SFC, as such terms are
defined therein.
13 “D&O Claim” means (i) any right or claim of any Person that may be asserted or made in whole or in part
against one or more Directors or Officers of SFC that relates to a Claim for which such Directors or
Officers are by law liable to pay in their capacity as Directors or Officers of SFC, or (ii) any right or claim
of any Person that may be asserted or made in whole or in part against one or more Directors or Officers of
SFC, in that capacity, whether or not asserted or made, in connection with any indebtedness, liability or
obligation of any kind whatsoever, and any interest accrued thereon or costs payable in respect thereof,
including by reason of the commission of a tort (intentional or unintentional), by reason of any breach of
contract or other agreement (oral or written), by reason of any breach of duty (including any legal,
statutory, equitable or fiduciary duty and including, for greater certainty, any monetary administrative or
other monetary penalty or claim for costs asserted against any Officer or Director of SFC by any
Governmental Entity) or by reason of any right of ownership of or title to property or assets or right to a
trust or deemed trust (statutory, express, implied, resulting, constructive or otherwise), and whether or not
any indebtedness, liability or obligation, and any interest accrued thereon or costs payable in respect
thereof, is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, unsecured, present or future, known or unknown, by guarantee, surety
or otherwise, and whether or not any right or claim is executory or anticipatory in nature, including any
right or ability of any Person to advance a claim for contribution or indemnity from any such Directors or
Officers of SFC or otherwise with respect to any matter, action, cause or chose in action, whether existing
at present or commenced in the future, which indebtedness, liability or obligation, and any interest accrued
thereon or costs payable in respect thereof (A) is based in whole or in part on facts prior to the Filing Date,
or (B) relates to a time period prior to the Filing Date.
14 “Section 5.1(2) D&O Claim” means any D&O Claim that is not permitted to be compromised pursuant to
section 5.1(2) of the CCAA, but only to the extent not so permitted, provided that any D&O Claim that
qualifies as a Non-Released D&O Claim or a Continuing Other D&O Claim shall not constitute a Section
5.1(2) D&O Claim.
15 “Conspiracy Claim” means any D&O Claim alleging that the applicable Director or Officer committed
the tort of civil conspiracy, as defined under Canadian common law.
16 “Continuing Other D&O Claims” means, as set forth in section 4.9(b) of the Plan, all D&O Claims
against the Other Directors and/or Officers which shall not be compromised, released, discharged,
cancelled or barred by the Plan and which shall be permitted to continue as against the applicable Other
Directors and/or Officers.
17 “Non-Released D&O Claims” means, as set forth in section 4.9(f) of the Plan, all D&O Claims against
the Directors and Officers of SFC or the Subsidiaries for fraud or criminal conduct which shall not be
compromised, discharged, released, cancelled or barred by the Plan and which shall be permitted to
continue as against all applicable Directors and Officers.
18 “D&O Indemnity Claim” means any existing or future right of any Director or Officer of SFC against
SFC that arose or arises as a result of any Person filing a D&O Proof of Claim (as defined in the Claims
13-10361-mg Doc 16 Filed 04/15/13 Entered 04/15/13 13:12:06 Main Document Pg 11 of 25
12
Noteholder Class Action Claims19
(other than the Continuing Noteholder Class
Action Claims20
);
(b) all Claims21
of the Ontario Securities Commission or any other Governmental
Entity22
that have or could give rise to a monetary liability, including fines,
Procedure Order) in respect of such Director or Officer of SFC for which such Director or Officer of SFC is
entitled to be indemnified by SFC.
19 “Noteholder Class Action Claim” means any Class Action Claim, or any part thereof, against SFC, any of
the Subsidiaries, any of the Directors and Officers of SFC or the Subsidiaries, any of the Auditors, any of
the Underwriters and/or any other defendant to the Class Action Claims that relates to the purchase, sale or
ownership of Notes, but for greater certainty does not include a Noteholder Claim.
“Subsidiaries” means all direct and indirect subsidiaries of SFC, other than (i) Greenheart and its direct
and indirect subsidiaries and (ii) SFC Escrow Co., and “Subsidiary” means anyone of the Subsidiaries.
“Greenheart” means Greenheart Group Limited, a company established under the laws of Bermuda.
“Auditors” means the former auditors of SFC that are named as defendants to the Class Actions Claims,
including for greater certainty Ernst & Young LLP and BDO Limited.
“Underwriters” means any underwriters of SFC that are named as defendants in the Class Action Claims,
including for greater certainty Credit Suisse Securities (Canada), Inc., TD Securities Inc., Dundee
Securities Corporation, RBC Dominion Securities Inc., Scotia Capital Inc., CIBC World Markets Inc.,